April disasters lead to changes in market

By Leah Beth Ward and Alan Goldstein / The Dallas Morning News<br><br>The IPO market has a healthy 39 deals set to take off this week in what some are calling a recovery from the near-death experience

Monday, July 31st 2000, 12:00 am

By: News On 6

By Leah Beth Ward and Alan Goldstein / The Dallas Morning News

The IPO market has a healthy 39 deals set to take off this week in what some are calling a recovery from the near-death experience for new issues in April.
But market watchers don't expect them all to be successful moon shots, either, because investors have become more selective.

"What we've seen since April is a cleansing out of deals as the market rebuilds," said Jeff Hirschkorn, senior analyst at IPO.com, a Web site that monitors initial public offerings.

Mr. Hirschkorn and others say that in this week's round, dot.coms â€“ often the easiest story for investors to digest â€“ will be out of favor. Internet infrastructure and broadband technology companies will get the most attention.

And investors want some things they didn't seem to care about previously, said Tom Fox, head of equity capital markets at Donaldson, Lufkin & Jenrette Inc.: "Price, near-term momentum and predictability of the earnings model."

Set to launch this week are Microtune Inc. of Plano and EXE Technologies Inc. of Dallas.

EXE cut the size and price of its offering two weeks ago to 7.25 million shares at $7 to $9 a share from 10 million shares at $11 to $13. The company was to go public in March when the market was at its frothiest but canceled the plan.

Analysts have worried that EXE, which sells inventory and supply chain software, couldn't show enough potential for profitability. But the company's first-quarter results this year showed narrower losses than last year's numbers.

Mr. Hirschkorn said he thinks EXE could have a successful debut because it has three heavyweight underwriters in DLJ, Salomon Smith Barney and Bank of America Securities as well as investments from Michael Dell and General Atlantic Partners, a Greenwich, Conn., venture firm.

"EXE is not the best deal on the calendar, but I think it's a winner," he said. EXE Technologies declined to comment, citing the upcoming offering.

Mr. Hirschkorn is also enthusiastic about Microtune, which expects to sell 4 million shares of its common stock, priced between $13 and $15 each. The company would have 37.6 million shares outstanding after the offering, bringing it an initial market value of at least $488.8 million.

Microtune's market for its chip consists of a broad lineup of electronic products that receive video signals, including televisions, videocassette recorders, cable boxes and personal computers. Daimler-Chrysler is a sizable customer.

Putting a TV tuner on a chip offers better reception and increases the potential for more portable video equipment.

"This is going to be a hit," said Mr. Hirschkorn, pointing to major stakes taken by billionaire George Soros and the clout of lead underwriter Goldman, Sachs & Co. Another major shareholder is Hicks, Muse, Tate & Furst Inc. of Dallas.

Microtune officials declined to comment, citing the upcoming IPO.

Some companies, like Urban Cool Network Inc., have rearranged their business models to pass muster in a more discriminating market. Jacob Miles, chief executive of Urban Cool, said the company hopes to refile a registration statement this week for an offering it first proposed in February.

"We did some restructuring away from being a dot.com to more of an ISP," Mr. Miles said. The company plans to deploy public Internet access kiosks in urban neighborhoods.

Other Texas companies planning on an IPO at some point include Alliance Data Systems Inc., ClearCommerce and Applied Science Fiction Inc.

Dallas-based Alliance spokesman Tony Good said the company amended its offering in June, but he could not predict when it would occur. The company designs customer relationship management, or loyalty, programs.

ClearCommerce of Austin sells personalized e-commerce applications to business-to-business and business-to-consumer online merchants. No date has been set for its debut. "Like many e-commerce companies, they are currently evaluating how the market is performing," spokeswoman Melinda Hart said.

Austin-based Applied Science Fiction Inc. filed to raise as much as $57.5 million in February but has since pulled its registration and changed management. Co-founder Mark Urdahl resigned as chairman, president and CEO "in order to pursue other opportunities," the company said in a recent statement.

Michael Conley, director of marketing, said board member Peter Palermo is the new chairman, and executive vice president Dan Sullivan has been named president and CEO.

"The market has changed its expectations in a way that demands profits sooner, so we had to re-do our process, which included a change in management," Mr. Conley said.

He said Applied Science Fiction is raising a second round of financing atop its $31 million in first-round capital. The company makes digital imaging hardware and software, which it licenses to makers of printers and copiers.

Manuel Royo of Southwest Securities Inc. said the best IPO story recently was Blue Martini Software, which makes programs that coordinate Internet sales and marketing. The San Mateo, Calif., company raised $150 million last week in its IPO, some 70 percent more than expected.

"They have substantial revenues, lots of products and blue chip customers," Mr. Royo said.